Mistakes of enterprises in the process of requesting employees for material compensation

In Vietnam, labor disputes related to compensation for damages between enterprises and employees are increasing, posing great challenges in the proper application of the law. The case "Dispute over compensation for labor damages" between Joint Stock Company D (Company D) and Mr. To Hong Q1, which was heard by the People's Court of An Giang province on appeal with Judgment No. 01/2025/LD-PT dated 25/02/2025[1] is a typical example of these errors. This ruling not only rejects the company's claim for compensation, but also points out serious flaws in the way the enterprise handles the material liability of workers. This article analyzes the problems in the application of Company D's regulations, and provides some advice for businesses in labor management and strict compliance with the law in the process of claiming compensation from employees.

Summary of the case

On 10/06/2020, Company D sued Mr. Q1, claiming compensation in the amount of VND 575,392,875, then added to VND 754,088,220, claiming that he had caused property loss. Company D gave evidence of a commitment signed by Mr. Q1 and 20 debt reconciliation records, in which he admitted to delivering goods to another employee, Mr. Truong Thanh H.

However, Mr. Q1 did not agree with this request. He argued that he was only a storekeeper, not responsible for delivering goods or collecting debts. He admitted to signing the pledge, but said it was due to pressure from the management and did not admit the amount of money lost.

After many first-instance and appellate trials, the High Court annulled the previous judgments and requested a retrial due to lack of solid grounds and insufficient evidence collection.

At the second first-instance judgment, the People's Court of Long Xuyen City (formerly) did not accept the entire request of Company D. Company D continued to appeal, but the Court of Appeal rejected this appeal.

The Court of Appeal of An Giang province said that Company D did not comply with the order and procedures for handling material liabilities as prescribed by law and did not have enough concrete evidence to force Mr. Q1 to pay compensation. Therefore, the Court decided to uphold the first-instance judgment and not accept Company D's claim for compensation.

Errors in the claim process of Company D

Firstly, the order and procedures for handling material liabilities have not been fully complied with

According to Clause 5, Article 32 of Decree 05/2015/ND-CP guiding Article 130 of the 2012 Labor Code, the handling of material responsibilities of employees must comply with the order and procedures for handling labor discipline, including the organization of meetings and the issuance of subsequent handling decisions. In this case, Company D organized a record of handling violations on 24/02/2020 and asked Mr. To Hong Q1 to sign a commitment to compensate, but did not issue an official decision on material liability. The Court of Appeal found that this was a serious violation of the legal process, resulting in the initial claim of VND 575,392,875 and then an additional VND 754,088,220 without legal basis to be approved. This error shows that the business lacks understanding or does not pay attention to the mandatory procedural steps, directly affecting the validity of the request.

Secondly, the evidence is insufficient to prove the specific fault and damage

One of the major weaknesses of Company D is the lack of concrete evidence to prove the fault of Mr. To Hong Q1 and the actual damage he caused. The violation handling record dated 24/02/2020 lists Mr. Q1's violations, such as exporting goods with the wrong invoice, delivering goods to the wrong object, and arbitrarily retailing, but does not clearly identify each act that led to any specific damage. When adding a claim of VND 754,088,220 based on 09 debt reconciliation records, Company D only relies on Mr. Q1's confirmation that the goods have been delivered to Mr. Truong Thanh H, without providing evidence of the delivery process, the approval of the management, or the consent of the customer. The court concluded that this was "insufficient grounds" under Article 131 of the Labor Code 2012, because the damage must be clearly and directly proven to be related to the fault of the employee. This reflects the lack of caution in collecting and storing evidence by businesses.

Third, the lack of reasonableness in determining the amount of compensation

The next flaw lies in the inconsistency in determining the amount of compensation. The record of handling violations dated 24/02/2020 determined that Mr. Q1's responsibility was VND 575,392,875 (28% of the total damage of VND 2,058,171,443), but when initiating an additional lawsuit, Company D asked for VND 754,088,220 without clearly explaining the source of the difference. The court held that this figure was "inconsistent" with the law, because material liability must be based on the actual damage caused by the employee, which cannot be arbitrarily changed without additional grounds. This lack of transparency reduces the credibility of the claim and is rejected by the Court, emphasizing that businesses need to have a clear, transparent and consistent calculation method from the beginning as well as throughout the proceedings.

Fourth, failing to fully verify the roles and responsibilities of relevant parties

Company D focuses on assigning full responsibility to Mr. To Hong Q1 (warehouse keeper) without clarifying the roles of other parties, especially Mr. Truong Thanh H (submitting the pharmacist to appropriate debts) and departments such as accountants or branch directors in making delivery notes and managing goods. The cassation court (Decision No. 02/2024/LD-GDT dated 09/01/2024) has pointed out that the collection of evidence is incomplete, leading to a lack of basis in the first-instance and first-instance appellate decisions. This shows that the enterprise does not conduct a thorough internal investigation to distribute responsibility fairly, leading to the claim becoming unilateral and failing to convince the adjudicating authorities.

People's Court of Ho Chi Minh City. Source: Tuoi tre

Fifth, transparency in the process of making commitments of employees

Mr. To Hong Q1 testified that the commitment dated 24/02/2020 was signed under pressure from the Board of Directors and legal staff of Company D. Although he did not provide evidence to prove this pressure, the Court still noted that the lack of transparency in the process of making the commitment reduced the legal value of the document. This raises questions about Mr. Q1's voluntariness, a fundamental principle in employment agreements. This error not only reflects the enterprise's poor human resource management, but may also violate the regulations on ethics and labor law, weakening Company D's argument before the adjudicating authorities.

Court rulings and recommendations for businesses

The People's Court of An Giang province in the appellate trial (2nd) on 25/02/2025 did not accept the appeal of Company D, upheld the first-instance judgment No. 04/2024/LD-ST dated 16/9/2024, and rejected the claim for compensation of 754,088,220 VND. The Court emphasized that: (1) The order and procedures for handling material liabilities are not in accordance with regulations. (2) The evidence and evidence of Mr. Q1's fault and damage are incomplete. (3) The determination of the compensation amount lacks legal and practical basis.

At the same time, the Court also pointed out that although the first-instance level had shortcomings in evaluating 09 invoices in detail, this was not enough to cancel the judgment, but only to learn from experience. This shows that the court has comprehensively considered and protected the legitimate interests of both parties, but also placed the burden of responsibility on the shoulders of businesses in preparing lawsuit documents, preparing fully, legally and transparently relevant evidence.

This case is an important lesson for businesses in labor management and compensation dispute settlement. To avoid similar mistakes, we believe that businesses should be careful and careful in the process of handling workers' materials, especially in the following matters:

Compliance with legal processes: Enterprises need to strictly comply with the provisions of the Labor Code, including holding meetings and issuing decisions to handle material liabilities.

Collect sufficient evidence: Specific evidence of fault, damage, and causal relationship between the employee's behavior and the business's losses should be noted.

Determine fair accountability: Conduct internal investigations to clarify the roles of all stakeholders, avoiding one-sided attribution.

Ensure transparency: Avoid illegal pressure when making commitments, ensuring all agreements are made on a voluntary basis.

Legal advice: Cooperating or consulting with lawyers, in-house lawyers, legal experts to build an effective human resource management and dispute handling process, avoid errors and comprehensively comply (formal law and substantive law) in the process of handling labor discipline is very necessary.

The mistakes of Joint Stock Company D in the case with Mr. To Hong Q1, from not complying with the process, lack of evidence, determining the unreasonable amount of compensation, to not clarifying the responsibilities of the parties,..., have led to the failure to request employees to compensate the company materially. The ruling of the People's Court of An Giang province is a valuable lesson for businesses about the importance of complying with labor laws. In the context of increasingly complex labor disputes, it is very necessary to review the management process, improve legal compliance to protect legitimate interests and avoid unnecessary legal risks for your business.